HC Deb 06 May 1993 vol 224 cc273-4
5. Mr. Kynoch

To ask the Chancellor of the Exchequer what is his assessment of recent indicators concerning the level of house prices.

Mr. Nelson

On the Halifax measure, house prices have risen for two months in succession. House builders and estate agents are notably more optimistic and have consistently been reporting increased activity. Those signs are very encouraging and clearly point to the level of activity rising further during the year.

Mr. Kynoch

Does my hon. Friend agree that the increasing activity in the housing market is further evidence of a rise in general economic confidence? Is not it clear that changes to stamp duty in the Budget and the buying-up of empty properties announced in the autumn statement last year have had a beneficial effect?

Mr. Nelson

My hon. Friend is right to say that there have been increasing signs of confidence in the housing market and in the economy generally. The buying-up of about 23,000 empty properties and doubling stamp duty to £60,000 have helped sentiment, but the biggest boost to confidence in the housing market has come from the significant reduction in interest rates, which has brought mortgage rates to at or below 8 per cent. As my right hon. Friend the Chancellor of the Exchequer said, that is the lowest level for 25 years.

Mr. Soley

Are we to assume from the Government's Budget changes that they are continuing to phase out mortgage income tax relief? If so, may I ask them not to do what the President of the Board of Trade advised a few years ago, which was to abolish it entirely except for first-time buyers, and instead to consider some of the more sensible proposals such as giving a subsidy to low-income home owners without artificially inflating the housing market, which would also allow renting to become an economic activity again, for landlords and tenants?

Mr. Nelson

The Government have taken measures to assist and promote the rented sector, such as the deregulation of rents, the renting a room schemes and others. However, as for mortgage interest relief generally, my right hon. Friend the Chancellor made the position for next year clear in his Budget statement. Every year in the Budget statement, the rate of mortgage relief is set for the following year. This is not the right time to make a Budget statement for the next financial year.